Topic: How To Invest

Q: Pat, what do you think about the investment merits of NFTs, or “non-fungible tokens”? I’ve been hearing a lot about them lately. Thanks.

Article Excerpt

A: NFTs, or “non-fungible tokens,” are an emerging, but highly speculative, investment. They’re focused on the belief that there is investment value in the relative scarcity of a cryptocurrency like bitcoin. (Fungibility is the ability of a good or asset to be interchanged with other individual goods or assets of the same type. Examples would be crude oil or gold bullion. Non-fungible goods are not interchangeable, such as individually owned cars and houses, or specific works of art.) In simplest terms, NFTs are collectibles tokens. They are inscribed on a permanent, tamper-proof blockchain, thereby weeding out potential counterfeits. They are also limited in quantity—a fact that has attracted speculators. A blockchain is essentially a decentralized database, or electronic ledger, that records transactions and tracks the movement of assets. Each cryptocurrency, such as bitcoin, has its own blockchain. (Blockchain itself has all kinds of emerging applications—apart from cryptocurrencies. Those include cybersecurity, voting systems, cloud storage and supply chains.) Meanwhile, NFTs are gaining investment interest. NBA…